Posted on 04/18/2023 7:55:54 AM PDT by Twotone
As many Americans who waited until the last minute will likely rediscover this weekend, filing federal taxes is a complicated and frustrating task. No matter how much care is taken, mistakes happen—and fairly often.
During the 2021 tax filing season, for example, the IRS "suspended and reviewed 35 million returns with errors," according to a new report from the Government Accountability Office (GAO), which annually reviews the IRS' performance and makes recommendations for improvement.
Those errors can be the result of taxpayers failing to include a necessary form or complete information, though they can also be the results of mistakes by IRS employees, the GAO reported. In either case, they cause long delays in getting refunds to taxpayers and are a costly strain on the IRS itself—during the 2021 filing year, IRS employees worked 10 hours of overtime per week for several months to deal with a backlog of incorrect tax returns.
There was a significant increase in the number of errors found by the IRS in 2021, which the GAO attributed to taxpayers being confused about how to report aid received during the COVID-19 pandemic, but more than 15 million returns have been flagged for errors in other recent years.
This is a persistent issue for the IRS, but the GAO's audit found that the tax agency "does not have a process to identify and analyze their underlying causes. This limits IRS's ability to reduce instances of recurring errors and anticipate potential future problems."
Until the IRS has such a system in place, the GAO warned, "taxpayers will continue to experience delayed returns and refunds," and the "IRS risks creating a perpetual backlog of work that will be difficult to address before the start of the next filing season."
The IRS' response: nah.
In a written response to the GAO, IRS Deputy Commissioner for Services and Enforcement Douglas O'Donnell rejected the recommendation to study frequently occurring tax errors because the agency already has a "robust" system in place to track and identify errors. O'Donnell added that further study of this problem would be redundant.
In its own response, the GAO disputed the notion that the IRS' current system is robust—and, based on the numbers, it's also clearly not very effective. The IRS provided no evidence, the GAO concluded, that its existing processes "have contributed to lower error rates for certain errors."
If only the IRS had just gotten $80 billion in new funding that could be used to better understand why so many taxpayers struggle to file without making mistakes.
Instead, much of that new funding will beef up the agency's auditing powers. In other words: Rather than helping taxpayers make fewer mistakes when they file, the IRS will have an opportunity to turn innocuous mistakes into much bigger headaches.
"Congress should override the IRS' disagreement with this key recommendation, and require a multi-year study on the main causes for taxpayer errors while filing," said Andrew Lautz, director of federal policy for the National Taxpayers Union, a free market group that advocates for lower, fairer taxes. "More importantly, Congress should carefully consider the results of such a study, and then even more carefully consider expanding the agency's authority to make corrections for certain common errors on a case-by-case basis—so long as taxpayers have reasonable courses to appeal or protest an IRS correction made on their behalf."
While it's at it, Congress should also think about reducing the overall complexity of the tax code so that Americans can file their taxes without needing the costly assistance of accountants or services like H&R Block.
Whether any further action is taken or not, the IRS' refusal to even consider further reviews of common mistakes provides a tidy illustration of a key difference between government and private sector business. If a business's customers are confused by a poorly designed website or an overly complicated order form, they might spend their money elsewhere. A business has a clear incentive to reduce its clients' mistakes, which might be costly and time-consuming to fix even if they don't drive customers away.
The IRS has none of those incentives, and its customer service will always lag because, well, none of us are really customers.
Math ? LOL
This is why I pay TurboTax their extortion money every year. It helps to reduce errors on my part, and e-file saves the manual mailing of forms back to the IRS.
I would rather they spend their time with errors than bothering people.
I also use them. This year I have a question that I can’t find the answer to. You can’t call the IRS with questions but you can call Turbotax.
They make mistakes because the forms are overly complicated and are deliberately made that way so that the Fedzilla can collect more $$$ from fines and interest on ‘late’ payments........................
So pursuing continuous improvement is not something the IRS gives a sh** about, right?
Let’s keep this clear. Like all other Fed bureaucracies they write the actual rules. Not Congress, them. Congress passes something that reads like a harsh memo from the UN and the IRS writes out what actually must be done in detail.
So, if “the process” is horse SH** that is still not the IRS’ fault. If it is impossible for an ordinary person to sort thru it, that is not the IRS’ fault.
And, if the ordinary taxpayers (i.e., that excludes richies who can afford tax lawyers and the 47% who never pay any taxes anyway) have to resort to exorbitant software monstrosities like TTax, that is OK with the IRS.
Tax collectors used to be tarred and feathered, yah know.
Yep, what I pay H&R Block is worth every penny to know I legally maximized my credits and it was filled out correctly.
Here are the most common mistakes:
https://www.irs.gov/newsroom/common-tax-return-mistakes-that-can-cost-taxpayers
Any answers you get from IRS personnel, are usually wrong, on purpose.
And they are not responsible for any bad information they give you, YOU ARE.
A Third Party tax preparer is more responsible, but you are ultimately.
There are Veterans and AARP Tax help available...............
I’ve used Turbotax for the past few years and find its user interface to be utterly hideous. I’ve had to file amended returns 2 of the last 4 years - once for forgetting an IRA contribution because I never saw where to enter it, and the other for forgetting a decimal point - you think Turbotax would be like “that number seems kind of high - you sure it’s right?”
I think if it’s interface was more made to match the forms you have instead of their Q&A type format it would be a lot better.
There are some things it does not do well. I have to go to the forms version, plug in the form that I know I need, and fill it out that way.
It is fine for most tax payers but once you start getting into the complicated stuff it becomes more tricky
My wife has an accounting firm, and takes the unusual position of reducing tax code complexity, which is a position that would seem detrimental to her business. She specializes in small to medium business with 750k to 10mil in revenue. Being that she is more into the advisory/outsource CFO of the business and helping businesses grow by understanding their numbers and tax liability, she sees how the complexity hampers her client base’s growth. She offers value-tiered flat rates as opposed to per hour charges, also based on her principles (complexity=more hours=mo money). She has turned a number of businesses around that were getting ready to fail from Covid-itis or just from generally being beaten down by the IRS. Not to mention almost doubling her annual revenue after implementing these changes after she took over the firm. Proud to call her my wife.
Fortunately, I now work in the Tax Department of a real estate company, and prepared this year’s return on their system. Nice employee benefit that other employees take advantage of.
I stopped using turbotax when they stopped supporting it on my “otherwise good” computer.
The last part in parentheses applies to the per hour based system, not her principles. The business does well enough via her pricing structure and provides a steady revenue all year long, not just during tax season.
We prepare over 800 returns per year, virtually all business returns.
The majority of error notices we receive are correctly filed returns and the IRS CREATES the errors and sends a letter stating that they corrected the returns. It’s really frustrating.
The word among CPA’s who handle audits is that it takes about three years to educate new auditors. That job falls on us as we must explain and argue that what we did on the return was correct.
Some of the errors created by the IRS are really bizarre. I did a corporate return for an insurance agency a few years ago and the IRS sent my client a correction notice, along with a bill for over $1.5 million.
On the return as filed, there were roughly $2 million in gross receipts and the cost of insurance sold was roughly $1.8 million leaving a gross margin of $200K to cover operating expenses.
The IRS claimed we should have added the cost of insurance, not subtracted it and sent a Tax Balance Due Notice of about $1.5 million!
Generally, the IRS makes more errors than corrections when they make their adjustments.
The Tax Code is written by people who don’t pay taxes.........................
Blame the RINO’s and GOP. When they have had majorities in DC they did nothing to fix the onerous tax codes. Every year many of us at filing time have to allocate time and money in preparation. Had to shell out $400 to the CPA and pay about $1500 to the Federal extortionists in DC. This topic infuriates me so much I gotta be careful not to elevate the BP too high. My two middle fingers saluted to the rotteness in DC are far too few for levity.
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